By Mary Stewart
Director, Research and Development
PERI

Whether you recognize it or not, your jurisdiction has performance standards in place. For example, your risk management program has procedures for: filing claims, notifying outside parties like insurance carriers or third-party administrators when a claim is reported, correcting hazards as discovered or reported, enforcing return to work criteria, using wellness programs, etc. All of these procedures involve a series of measurable steps and a decision-tree process.

If you know the statistical values for any or all of the steps (i.e., the average number of days to report a claim, dollars saved by utilizing a return to work or wellness programs), then you have a planned performance measurement program with known standards. On the other hand, if you don’t know the statistical significance of various steps in a given process, or the results of implementing a new program, you are still using standards. The biggest difference between the two options is, if you’re in the group that knows the statistical values, you can document the effectiveness or lack of efficiency in their operations. In this world of "prove it" and "show me" conditions, being in the first group has its benefits.

Evaluating a performance standard usually involves:

• defining what to measure,
• setting a realistic goal,
• monitoring internal changes,
• reviewing the results, and
• developing a benchmarking peer group for external comparison.

In this article, we’ll look at defining what you want to measure. In future articles, we’ll look at some of the other aspects of managing your performance measurement activities.

Choose a Goal

The goal must link to your mission. Consider the difference of an NFL team whose mission is to make the playoffs versus another team whose goal is to win the Super Bowl. Frequently, governments set a goal to increase an activity standard, such as to receive more applicants, write more traffic tickets, decrease the fire department’s response time, or offer more training classes. If fact, their desired result is much larger – what they really want is to hire the best candidate, decrease intersection accidents, reduce severity from fire, and have a quality work force that is able to perform the tasks assigned.

Choose a goal -- select a process, operation or service that needs improvement and would benefit from a benchmarking comparison.

Another approach is to select a process that receives considerable political focus. The end result will either justify the operation’s purpose or provide information about its lack of effectiveness.

Define the Measurements

Many jurisdictions are already benchmarking. With just a little research, your entity can select similar functions and mirror their process. For example, PERI has a Data Exchange Program to benchmark claims activity; jurisdictions of all sizes submit a copy of their workers’ compensation and liability claims. PERI loads the information into a database for comparison against your own entity across different years, other jurisdictions of like size throughout the nation, then all participants within your state, and finally against all participations across the nation.

Measurements should focus on the quality of the program or service. Ask "What part of the operation or service will be measured?" Then create a list of performance indicators that relate to the goals you have defined. Remember, not all of the performance indicators will become a benchmarking metric. It is important, though, to start with a variety and then reduce the number of indicators based on the ability to collect the metric information and what other jurisdictions use as a best practice application.

Chances are, the best practice application from another jurisdiction will also need some modification to fit your needs. For example, fleet metrics use miles driven and livery conditions track number of passengers or revenue. You might not currently collect information on the number of passengers, but you may have statistics on the revenue collected and miles driven. Start with what you have, determine if it is important enough to add a passenger count, then create a counting system and implement it at the beginning of the next quarter.

Design the Measurement

The design of each measurement should monitor tasks or work load production and create resulting facts that can be used for internal and external comparison. Regardless of your size, all governments struggle to provide the necessary services with limited resources. Performance measurement can be a useful tool to monitor and evaluate the effectiveness of any task, program, operation, or process. When budgets get tighter, performance measurement becomes even more important as a tool to measure whether a given service or task is effective and/or an appropriate use of resources.

Most operations are measurable. It may take a brainstorm session to determine how an activity relates to the organizational goals. You’ll have to ask questions like "What does this function provide?" "If we stopped the operation, who or what other operation, would suffer?" The answers to these types of questions help to link a set of measurements.

Here are some examples of productivity to measure in different municipal operations:

• Number of claims per full-time employees or number of claims per population.
• Percentage of injured employees utilizing return-to-work, and/or number of days out before return to work.
• Total gross incurred cost per $100 of payroll.
• Average number of days claim remains open.
• Percentage of claims represented by an attorney out of all claims submitted in policy year.

Human Resources

• Turnover ratio for all jobs.
• Cost to fill a vacancy, including associated training to start position when hired.
• Percentage of returning applicants.

Fire Department

• Percentage of false calls divided by hours spent at each call.
• Number of repeat calls to same location divided by the cost to install monitoring devices.

Environmental Services

• Total cost of all lines divided by the percentage of the repair calls from the replaced lines

Training Section

• Return customers taking additional courses/classes.
• Strong satisfaction level reported in program surveys.
• Total cost divided by numbers of participants.

Once your performance standards are in place, this process will support many goals already defined within your operations, such as proving a return on investment by using cost/benefit analysis, increasing productivity, evaluating the effectiveness or inefficiency of a program or function, supporting budget commitments, evaluating employee morale, and justifying training or modifications in departments.

Risk Management

This is the second in a series of articles designed to combine practical application of performance measurement with management theories and lessons learned.